Wednesday, July 12, 2017

Will Trump Open A Pandora’s Box Of Litigation Over Cuban Property?

Will Trump Open A Pandora's Box Of Litigation Over Cuban Property?
If the president fails to continue the suspension of Title III, business
relations will be disrupted far more severely and irreparably than they
would be by any regulatory change.
07/10/2017 02:34 pm ET

Long before the Departments of State, Treasury, and Commerce finish
writing the new regulations that President Trump ordered to restrict
trade and travel to Cuba, the president will face another decision on
relations with Havana that could be far more consequential for U.S.
businesses. By July 16, he will have to decide whether to continue
suspending certain provisions of Title III of the Cuban Liberty and
Democratic Solidarity Act of 1996 (also known as Helms-Burton, after its
sponsors).

If he allows Title III to go fully into effect, he will open the door to
as many as 200,0000 lawsuits by U.S. nationals whose property was taken
by the Cuban government after 1959.

U.S. courts would be swamped, the ability of U.S. companies to do
business on the island would be crippled, and allies abroad might
retaliate for U.S. suits brought against their companies in Cuba. The
tangle of resulting litigation would take years to unwind.

Title III allows U.S. nationals to file suit in U.S. courts against
anyone "trafficking" in their confiscated property in Cuba—that is,
anyone assuming an equity stake in it or profiting from it. The U.S.
Foreign Claims Settlement Commission has certified 5,913 claims of U.S.
nationals whose property was seized. These are the claims that Cuba and
the United States had begun to discuss during the Obama administration.

But Title III takes the unusual position of allowing naturalized Cuban
Americans who lost property to also file suit against alleged
traffickers. Normally, international law recognizes the sovereign right
of governments to dispose of the property of their own citizens.
According to the Department of State, by including Cuban Americans who
were not U.S. citizens when their property was taken, Title III creates
the potential for an estimated 75,000-200,000 claims worth "tens of
billions of dollars."

Back in 1996, angry opposition from U.S. allies Canada, Mexico, and
Western Europe, whose companies doing business in Cuba would be the
targets of Title III law suits, led President Bill Clinton to insist on
a presidential waiver provision in Title III when Congress was debating
the law. As a result, the president has the authority to suspend for six
months the right to file Title III law suits, and he can renew that
suspension indefinitely. Every six months since the Cuban Liberty and
Democratic Solidarity Act was passed, successive presidents, Democrat
and Republican alike, have continued the suspension of Title III.

If President Trump does not renew the suspension by July 16, however,
claimants will be free to file Title III law suits by the tens of
thousands. Once the suits have been filed, there will be no way to undo
the resulting legal chaos.

When the Cuban Liberty and Democratic Solidarity Act was passed, U.S.
allies in the Americas and Europe denounced its extraterritorial reach.
Mexico, Canada, and the United Kingdom passed laws prohibiting
compliance with it. The European Union filed a complaint with the World
Trade Organization, which it dropped after President Clinton suspended
Title III. In fact, the principal justification both President Clinton
and President George W. Bush offered for continuing the suspension was
the need to maintain cooperation with European allies.

If President Trump does not renew the suspension, all these old wounds
with allies will be reopened as U.S. claimants try to haul foreign
companies into U.S. courts for doing business in Cuba. We already have
enough tough issues on our agenda with Mexico, Canada, and Europe
without adding another one.

U.S. businesses would not be exempt from potential liability. A Cuban
American family in Miami claims to have owned the land on which José
Martí International Airport was built, so any U.S. carrier using the air
field could be sued under Title III. Another family that owned the Port
of Santiago could file suit against U.S. cruise ships docking there.

Moreover, it would be almost impossible for a U.S. company to know in
advance whether a proposed business opportunity in Cuba might become the
subject of Title III litigation. "This will effectively end for decades
any attempt to restore trade between the U.S. and Cuba," attorney Robert
Muse told the Tampa Bay Times.

Explaining the new trade and travel regulations that President Trump
announced on June 16, senior administration officials said they were
designed "to not disrupt existing business" that U.S. companies were
doing in Cuba. If the president fails to continue the suspension of
Title III, business relations will be disrupted far more severely and
irreparably than they would be by any regulatory change.